Big Investment Scams

Securities and investment firms have the responsibility to protect your money and perform the services that they have promised. These firms can have a direct impact to your financial security and future, so it is best to choose them wisely. You don’t want to engage with dishonest investment advisers and stockbrokers and lose everything you worked hard for.

According to the website of the Houston commercial lawyers of Williams Kherkher, disputes regarding securities and investments may include but are not limited to insider trading, unauthorized trading, misrepresentation and nondisclosure, market manipulation, investment scam, and misappropriation.

Despite law protections, some people still become victims of these disputes, especially investment scams. Your first line of defense against such scams is knowledge. Below are three big investment scams that may come your way.

Pyramid Schemes

This is a type of scheme where the money from new investors is used as a return for the old investors. Since it is not a sustainable system, everything falls apart when the money from the new investors is not enough to sustain the returns for the old investors.

This scheme is much closer to you than you realize, and you will probably hear something about it from someone you know, who will invite you to join a group of investors who are working on something big. Once you opt in and the system falls apart, the old investors will just disappear and you will never see a cent from them again.

Pump and Dump Scams

Pump and Dump is an illegal practice wherein the scammers promote an investment on a low-priced stock. Most of the time, these scammers actually own a big portion of the stocks in that investment. Sometimes, the investment itself is not even a legitimate business. As more and more people buy shares, the value of the stock goes up and up. Once the value reaches a certain high point, the scammers put their money out, resulting into the value of the stock to go down the drain, together with the money you have invested.

Offshore Investments

Offshore investments are just what they sound like – investments outside of the country. If something goes wrong, these investments can be hard to fight for, so scams concerning them are becoming more common. You can lose your money entirely. Not only that, most offshore investing scams also use a tax avoidance scheme, so there is a possibility that you owe the government taxes and penalties.
So if someone approaches you, entices you to invest your money offshore, and promises you with big returns, be wary.